Legal Ways People Can Steal Your Intellectual Property

Granted, the title above is oxymoronic (just to be clear, stealing is illegal), but it does point to an important truth. Even after your trademark application has been approved, people can challenge and steal your intellectual property, using legal means. The reasons this is possible is that approved trademarks do not come with absolute ownership. When a trademark is issued, the United States Patent & Trademark Office (USPTO) provides the terms and grounds on which the rights may be retained. If any of these are broken, you risk losing your rights. To put this into perspective, the following are some of the scenarios where you could lose your rights.

Improper Licensing

Rights to a trademark can be lost if you license them without the right supervision to another party. For instance, if you own a franchise and you licensed the rights to your mark to a franchisee without following the right procedure, you could lose the trademark completely. You could also lose your mark if you license them to another party but fail to maintain control over its use.

Case in point: Let’s assume you own a wholesale clothing store named “Brut,” and that the store is recognized for the high quality of its products. After a few years, you decide to expand your company by licensing the rights to different companies, one of which is run by Bob. All goes well for a few months, until one day, Bob realizes that instead of producing the clothes, he can simply import cheaper clothes from another country, slap on the “Brut” brand, and make a killing. If he were to do this, you could lose the rights to your federal trademark. That is because the Trademark Office could rule that, thanks to Bob’s misdirected enthusiasm, your trademark no longer serves the role it was assigned for.

Abandonment

If you fail to use your trademark for a specific period of time, it can be considered abandoned, in which case you would lose the rights to your mark. Once a trademark is approved, owners are expected to begin using it in commerce. You cannot simply ‘hoard’ a mark indefinitely. The only instances where allowances may be made is if the owner files for a trademark with an ‘intent to use’ application, in which case, the Trademark Office typically allows six months for the company to begin using its new mark. If for some reason you fail to use the mark within this period, you’ll need to file for an Extension Request or your rights will be revoked.

So how long does a mark need to be abandoned before it is claimed? It varies depending on the situation. However, in most cases, the USPTO is likely to rule abandonment if a mark is left unused for three years.

An important point to make is that grounds for abandonment can also be made if you let your mark go un-policed for an extended period of time. For instance, if you own the rights to the mark ‘Brut’ and you let another company use the mark for close to a decade without doing anything about it, a court could view your lack of action as abandonment. This is why companies are encouraged to be constantly on alert for any possible infringement, and to take action if any infringers are found. If you do not have time to constantly monitor the web and the various trademark databases (few people do), you could assign the task to a trademark attorney.

Genericness

Losing your mark as a result of abandonment, poor policing, and improper licensing are all products of a company’s failure. Nevertheless, a company can become so successful, that it loses the right to its mark because the name has become generic. A brand is considered generic when it becomes synonymous with a general class of product or service, as opposed to identifying the company that provides those products or services. For instance, when people say the word “aspirin”, they are referring to a drug used to relieve minor aches and pains. The word “aspirin” even exists in the English dictionary. Yet “aspirin” was not always a common word. It used to be a brand of pharmaceutical drugs owned by Bayer. But because the brand became so popular that the name was no longer distinctive, the company lost the rights to its mark. Good examples of trademarks that became so popular they were lost because of genericness include “zipper” and “kerosene”. Still there are also cases of companies that were able to successfully rescue marks before they became too generic. A good example is Xerox.

Preventing Trademark Theft

Knowing the major ways that you could lose the rights to your mark can help you protect it from legal theft. For instance, if you allow a company to continue to use your mark without taking any policing action, you risk losing that mark. This is why many businesses retain the legal guidance of a trademark attorney. Trademark infringements do not just occur when another business adopts the exact same brand as your company. Grounds of infringement can also be made if the company’s mark is confusingly similar to yours. In such cases, the argument of similarity will be judged by the likelihood of confusion. The Trademark Office will consider the strength of the mark, the type of service provided by the company, the marketing channels used by both companies, and whether there is any evidence of potential confusion within the market.

Companies can also initiate legal action to strip you of your mark, if they discover that one of the companies licensed to your trademark is functioning outside the range of permitted activities assigned to your mark. Because of this, it is vital that you be careful of whom you license your mark to.

By: Xavier Morales, Esq.

Xavier Morales, Esq. is a licensed trademark attorney. Mr. Morales founded his trademark law practice in January 2007 with the goal of providing intellectual property expertise to entrepreneurs and businesses around the country. Mr. Morales’ law practice emphasizes trademark registration, counseling and enforcement.

Read more about Mr Morales, and The Law Office of Xavier Morales here.